* European shares edge slightly higher
* Basic materials lead sectoral gains, oil stocks down
* Strong results lift Adyen, Thyssenkrupp, SocGen
* Futures point to slight gains on Wall Street
Feb 10 - Welcome to the home for real-time coverage of
markets brought to you by Reuters reporters. You can share your
thoughts with us at markets.research@thomsonreuters.com
WALLSTREETBETS TURN TO CANNABIS, POT STOCKS GET HIGH (1141
GMT)
The Reddit crowd's viral rocket emoji is still aiming at the
moon but its cargo has changed.
Pot stocks are now surging in U.S. premarket action with the
likes of Tilray, Aurora Cannabis and the Alternative Harvest ETF
all feeling some Gamestonk love!
Swaggystocks, which aggregates sentiment on shares talked
about in Reddit's WallStreetBets forum, shows on its website
that Tilray, which supplies cannabis products to pharmaceutical
distributors, is at the centre of the attention:
ETF analysis platform TrackInsight published a list of top
performing funds in January which shows that the growing
popularity of cannabis with the Democrats in power.
"Cannabis stocks have jumped after Democratic leaders under
the new Biden administration indicated that they would propose
legislation to end the federal prohibition on marijuana",
Trackinsight wrote in a release showing this chart:
You can also have also a look at the performance of Cannabis
ETFs here.
(Julien Ponthus and Danilo Masoni)
*****
IS SUPER MARIO ALSO BOOSTING THE EURO? (1037 GMT)
The appointment of former ECB head Mario Draghi as Italy's
designate Prime Minister has boosted the tightening of the
spread between the yields of Italian and German government bonds
and also helped Italian stocks.
According to Commerbank analysts, same goes for the euro.
"The saviour of the euro returns and causes the euro to
appreciate", they write in a research note.
They line up some reasons why Draghi taking the lead in
Italy is supporting the currency.
He gives rise to the hope "that with him as Italian Prime
Minister the project ‘single euro zone budget’ might progress".
Draghi can initiate the structural reforms in Italy he had
asked as president of the ECB, "which would improve the
country’s long-term possibilities as far as growth, national
finances and debt levels are concerned."
He might succeed in receiving additional funds from the EU
for the Italian economy and reform process during his time in
office, which would lead to additional stability – not just in
Italy but also for the euro.
Italy and its public debt have been seen as a potential
source of instability for the bloc for a long time and now
things could change.
Today the dollar is close to two-weeks low as demand for
safer assets ebbed, while the euro edged up to
$1.2142, adding to a three-day gain and hitting its highest
since the start of February.
(Stefano Rebaudo)
*****
BANKS BRIGHTEN EUROPE'S EARNINGS SEASON (0934 GMT)
Europe Inc's Q4 earnings saw their biggest positive revision
in more than three months, in a promising surprise that
underscores how the new round of lockdowns had made investors
too downbeat going into the reporting season.
Analysts now expect earnings in that quarter to have fallen
18.2% versus the 23.9% drop they saw last week, according to the
latest Refinitiv I/B/E/S data.
A big improvement indeed, but what exactly is behind it?
The bulk of the improvement came from Financials with the
Banks fourth-quarter EPS growth rate improving to -48.2% from
-63.8% week-over-week, the Refinitiv I/B/E/S data show.
Digging down, it turns out that strong results from BNP
Paribas (1.19 euros actual vs 0.87 consensus), Deutsche Bank
(0.18 euros vs 0.04), Intesa Sanpaolo (0.02 euros vs -0.07), and
Santander (0.07 euros vs 0.06) were the largest contributors.
This morning we had some more bank results with both Societe
Generale and ABN Amro beating expectations.
Banks earnings have seen net upgrades for the past 16 weeks,
as the graphic below shows. In the second chart you can see the
big jump in Europe's Q4 earnings expectations.
(Danilo Masoni)
*****
STRONG RESULTS KEEP STOXX AFLOAT (0833 GMT)
A batch of stronger-than-expected results are keeping
European stocks afloat, while investors expect U.S. data in the
afternoon.
U.S. inflation numbers will be closely watched as they might
push U.S. Treasury yields higher.
The STOXX 600 index is moving around parity, with
the basic materials index leading gains, up 1.1%.
The bank stock index is down 0.1% after stronger
than expected results from Societe Generale, whose
shares are up 2.6%; while stocks in ABN Amro are down
2.8% as the bank's profit fell 83%.
Natixis stocks jump 7.5% as its parent BPCE plans
a takeover bid for the remaining stake it does not hold.
Thyssenkrupp shares are among best performers of
the STOXX 600, up 5.6%, after the company raised its annual
outlook for the first time since 2017.
(Stefano Rebaudo)
*****
EARNINGS AND STIMULUS, STIMULUS AND EARNINGS (0758 GMT)
Earnings and stimulus, say no more.
Add hopes of a large U.S. fiscal boost lifting a
pandemic-hit global economy to a slew of generally upbeat
earnings and it's no wonder world stock markets are cruising at
record highs.
Japan's Toyota jacked up full-year earnings
forecasts by 54% to a record $19 billion. Societe Generale
beat profit forecasts for the fourth quarter, as did
Dutch bank ABN Amro.
Thyssenkrupp shares are up more than 6% premarket
after it raised its sales and profits outlook due to improved
demand for automotive components and materials.
European stocks are opening sharply higher, while U.S. stock
futures suggest a firm open for Wall Street. Chinese shares rose
to their highest in over 13 years, helping lift MSCI's global
equity index to new record peaks.
Focus now on U.S. inflation data which is expected to show
an annual rise of 1.5% in the core consumer price index.
Investors believe low U.S. interest rates will stay at least
until 2023, given the Fed's willingness to tolerate inflation
rising beyond 2%. But that view could be questioned if growth
and inflation data surprise on the upside in coming months.
Elsewhere, the dollar index hit a two-week low, while
Bitcoin hovered around $46,500 after reaching a new
high at $48,216, following Tesla's disclosure of a $1.5 billion
investment in the leading cryptocurrency.
Key developments that should provide more direction to markets
on Wednesday:
- China factory gate prices rose in annual terms in January for
the first time in a year.
- Germany's Jan inflation reading at 1.6% y/y
- Italy's 5-Star to ballot members after Draghi presents
government agenda
- UK trade balance data due
- Fed Chairman Jerome Powell speaks at 1900 GMT
- ECB's Lagarde, Panetta speak at 1300 GMT
- Heineken reports annual results broadly as expected;
Shipping group Maersk predicted a Q1 earnings boost and higher
profits as demand for container freight booms
- Norway's DNB announced dividend payments for 2019 and 2020;
Monte dei Paschi 2020 losses soared to 1.69 billion euros
- US results due: General Motors, Coca Cola, CME Group, Western
Union, MGM, Manulife, Uber
(Dhara Ranasinghe)
*****
EUROPE IN THE BLACK (0628 GMT)
European futures are in positive territory -- after a slight
correction yesterday -- as U.S. stimulus and vaccine roll-out
continue to fuel optimism about an economic recovery.
Wall Street ended flat, but just because investors rotated
out of tech names into sectors expected to benefit from the
pandemic aid package.
Earnings action can be expected in Europe, with some banks
beating analyst expectations.
U.S. data will also be in focus as a return of inflation
might push U.S. yields higher, affecting financial markets
across the board.
(Stefano Rebaudo)
*****